The pride of the nation: A landmark year for People’s Bank

An Exclusive Interview with Clive Fonseka, CEO/GM of People’s Bank

As People’s Bank concludes its strongest financial year in a 65-year history, we sit down with CEO/GM Clive Fonseka to discuss the strategic re-engineering that led to a record LKR 40.2 billion profit, the group’s historic LKR 4 trillion asset milestone, and its evolving role in Sri Lanka’s economic recovery.

Key Interview Highlights:

• Historic Profitability: Achieved an all-time high standalone Profit After Tax (PAT) of LKR 40.2 billion in 2025.
• Asset Milestone: People’s Bank Group total assets surpassed the LKR 4.0 trillion mark.
• Strategic Pivot: Successfully reduced SOE lending exposure from nearly 60% three years ago to approximately 20% by the end of 2025.
• Digital Leadership: Over 83% of transactions are now digital, with the “People’s Pay” app exceeding 4 million subscribers.

2025 has been described as a “landmark” year for People’s Bank. What were the primary drivers behind these record-breaking financial results?

Clive Fonseka: It has indeed been a historic year. We reported a standalone PAT of LKR 40.2 billion, the highest in our history. This was not a cyclical bounce but a result of a deliberate structural shift. Our operating income rose by 32.5% to LKR 165.8 billion, driven by a 32.8% increase in net interest income. Importantly, we achieved this while maintaining a robust capital position, with a Total Capital Adequacy ratio of 16.5%, well above regulatory requirements. Even external shocks, like Cyclone Ditwah, were managed through proactive business continuity and prudent risk management.

You mentioned a “structural shift.” Can you elaborate on the Bank’s strategic move away from State-Owned Enterprise (SOE) lending toward the private sector?

Clive Fonseka: This is perhaps the most significant transformation in our operating model. Three years ago, close to 60% of our lending was directed toward the government and SOEs. By the end of 2025, that share has fallen to approximately 20%. We have shifted our focus toward competing vigorously for private-sector business, particularly with SMEs, larger corporates, and retail borrowers. This shift didn’t just happen at headquarters; it required our 750+ branches to develop new origination capabilities. The results speak for themselves: total lending expanded 17% last year, fueled by a 30% growth in private-sector credit.

With such a rapid shift in lending, how has the Bank managed to maintain asset quality and stability?

Clive Fonseka: We have significantly tightened our underwriting and execution. Historically, our non-performing loan (NPL) ratio was around 5.5%. Over the past three years, that has fallen to roughly 1.5%. We’ve also maintained record-high liquidity in both rupees and dollars, with a Rupee Liquidity Coverage Ratio of 263.3%. Stability is our bedrock; surpassing the LKR 4 trillion asset milestone at the Group level reinforces our scale and resilience to support national economic activity.

People’s Bank is often considered a bank for all the strata of the society. In this context, how do you balance these commercial goals with your commitment to CSR, sustainability, and the national economy?

Clive Fonseka: Profitability is never our sole objective. We remain a “nation-minded” organization. For instance, 30% of our branches are in areas where no other private bank or private finance company exists, ensuring 7 in 10 Sri Lankans have access to banking. Our CSR and sustainability framework—built on the “Triple Bottom Line” of People, Planet, and Profit—drives us to give back. In 2025, we were recognized as the “Sustainable Bank of the Year” in the public sector. From supporting the national “Pay Digital” agenda to fostering youth entrepreneurship through the “BizTeens Challenge,” our goal is inclusive growth.

People’s Bank operates with a dual identity: you are a State-Owned Enterprise (SOE) with a national mandate, yet you are competing in a sophisticated commercial market. How do you navigate the challenges of being an SOE while delivering record profitability and adhering to global best practices in governance?

Clive Fonseka: It is a delicate but a rewarding balance. The primary challenge for any SOE is the perception that social mandates must come at the expense of commercial efficiency. We have proven that this is a myth. At People’s Bank, we view our state ownership not as a shield from competition, but as a responsibility to lead by example.

Our record LKR 40.2 billion profit was achieved because we embraced a culture of “Commercial Discipline.” We have streamlined our processes, improved our NPL ratios, and implemented a rigorous governance framework that mirrors the highest international standards. In 2025, our commitment to these standards was validated when we were named among the “Top 20 Employers” by AICPA and CIMA and received multiple awards for “Best Corporate Governance” and “Most Transparent Reporting.”

We have demonstrated that a state bank can be lean, digitally advanced—with over 83% of transactions now being digital—and highly profitable, all while remaining “nation-minded.” By shifting our strategic focus toward private-sector lending and reducing SOE exposure, we are proving that an SOE can thrive in a competitive landscape through sheer merit and customer-centricity. Ultimately, our goal is for People’s Bank to serve as the definitive blueprint for how a state institution can achieve financial excellence without losing its soul or its commitment to the people.